The bond market opened with prices a lower, and rates correspondingly higher. Shortly after the opening rates moved up to 4.743%. They immediately reversed course with rates heading lower, and have continued that trend.

When the market first opened it responded to core-CPI (Consumer Price Index). Expectations were for a reading of +0.2% across the board. The Labor department reported that consumer prices less food and energy were +0.1%; obviously lower than expected.

The aggregate CPI was at the high end of the expected range of +0.4% to +0.7%. Total CPI was announced at +0.6%.

That moved rates on the 10-year Treasury -.021% from Monday’s close of 4.735%, making the rate 4.714%.

The downward trend could have been even lower, but the market may have been tempered by Housing Starts of 1.518m, which was at the high end of the forecast 1.490m to 1.520m. Building Permits, while less important, were higher than forecast at 1.544m. The predictions were for 1.500m to 1.520m.

Shortly into the morning’s trading the Industrial Production and Capacity Utilization were made public. Both were lower than predicted. Industrial Production was predicted at -0.1% to +0.2%, but was reported at -0.2%. The market was looking for Capacity Utilization to be 81.8% to 82.0%, but was 81.4%.

After the Industrial report rates moved even lower. The rate on the 10-year Treasury is 4.692% which is -.043% lower than yesterday’s close.

TOMORROW, 18 APRIL.

There is no data tomorrow. Rates will be responding to any non-economic events. One such event may be some profit taking which means we may see rates going back up some.

[Publisher’s note: In an attempt to clean up our blog, we will post all three outlooks on Monday only. We will post an outlook on days when one is modified.]

Steve Boxmeyer [612] 799 – 6858
steve@LendWithIntegrity.com